United Kingdom Car Rental Industry Set for Strong Growth Driven by Rising Demand and Sustainability Trends

The car rental industry in the United Kingdom, valued at USD 3,382.8 million in 2023, is poised for robust growth, with projections suggesting it will reach USD 6,146.1 million by 2034. This represents a compound annual growth rate (CAGR) of 5.6% from 2024 to 2034, according to a new market report from Future Market Insights (FMI).

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Demand Surge in Key Segments: Tourism, Urbanization, and Sustainability

The UK's car rental sector is thriving due to several key market drivers, including growing demand from the tourism sector, increased urbanization, and an emphasis on sustainability.

Tourism and Heritage Travel: With its rich cultural heritage, the UK remains a top tourist destination. Travelers are increasingly turning to car rentals for flexible, cost-effective transportation to explore the country's historical landmarks, beautiful landscapes, and rural areas. The car rental market benefits from this growing tourism trend, particularly for intercity travel and exploring scenic destinations like Scotland's Highlands.

Urbanization & Changing Travel Patterns: As urbanization increases, many city dwellers are opting for car rentals for sporadic travel rather than owning vehicles. Congestion in major cities also drives demand for rentals, offering a more convenient and cost-effective alternative to private car ownership.

Sustainability and Eco-Friendly Solutions: Environmental concerns are reshaping the car rental industry in the UK. Rental companies are adapting by incorporating more electric and hybrid vehicles into their fleets, in response to stringent government emissions regulations and growing consumer demand for eco-friendly travel options.

Industry Trends & Technological Advancements

Technology is also playing a significant role in shaping the future of the car rental sector. The use of blockchain technology is improving the security and transparency of rental transactions, while digital platforms are streamlining the booking process, making rentals more convenient for consumers. In addition, the rise of contactless rentals and driverless technology are expected to further enhance customer experience and fuel industry expansion.

Segment Insights

Economy Cars: The economy car segment remains the most popular in the UK car rental industry, with a projected market share of 33% in 2024. These vehicles are favored by budget-conscious tourists due to their low rental costs, fuel efficiency, and suitability for urban environments. They are particularly in demand for short-term rentals and local travel.

Intercity Travel: The intercity segment is expected to capture a 39.8% market share in 2024. The UK's well-developed road network and growing preference for private transportation are driving demand for intercity car rentals. Tourists and local residents alike seek the flexibility and convenience of renting cars for journeys between cities, particularly as public transportation options are limited in certain areas.

Regional Insights

England: England's car rental industry is experiencing steady growth, fueled by rising demand for staycations, particularly following the pandemic. The government's push for low-emission zones in cities is encouraging rental companies to expand their fleets of electric and hybrid cars, in line with environmental targets.

Scotland: Scotland's growing tourism sector, particularly in rural areas, is significantly boosting demand for rental cars. The country's lack of widespread public transportation options in rural regions has made car rentals essential for tourists seeking to explore Scotland's landscapes and cultural sites.

Competitive Landscape

Leading players in the UK car rental market are focusing on several strategic initiatives to adapt to shifting market trends and evolving customer preferences. One key approach is expanding their fleets with electric and hybrid vehicles to meet the growing demand for eco-friendly transportation options.

Digital transformation is also a priority, with companies investing in mobile apps, contactless rental processes, and enhanced online booking platforms to improve the customer experience.

To offer more comprehensive mobility solutions, major players are prioritizing partnerships and collaborations with ride-hailing services and transportation networks. These efforts are aimed at ensuring long-term sustainability and maintaining a competitive edge in the rapidly changing automotive landscape.

Key players in the sector include:

• The Hertz Corporation
• Alamo Rent a Car
• Burnt Tree Vehicle Rental
• SP AutoReisen Rent a Car SL
• Avis Rent A Car System, LLC
• Cicar
• Thrifty Car Rental
• Dollar Rent A Car, Inc.
• Europcar Mobility Group
• Budget Rent a Car System, Inc.
• Lojas Centauro

Significant advancements in the car rental industry are being made by key industry participants, and these include:

In 2023, Hertz launched "Hertz Electrifies New York City," a public-private partnership aimed at expanding electric vehicle (EV) adoption and spreading the environmental and economic advantages of electrification throughout neighborhoods.

Hertz plans to add up to 1,700 rental EVs to its local fleet through the program, as well as 100 new jobs to support its expanding New York presence and EV education and training opportunities for students in collaboration with four public high schools.

As part of the collaboration, Hertz will provide five of its electric vehicles (EVs) to support New York City schools in their efforts to teach the future generation of auto mechanics through practical instruction.

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Key Segments Profiled in the Car Rental industry

By Car Type:

• Economy Cars
• Compact Cars
• Intermediate Cars
• Premium Cars
• Luxury Cars
• Others

By End Use:

• Intercity
• Intra-city
• On-Airport
• Others

By Sector:

• Organized
• Unorganized

By Country:

• England
• Scotland
• Wales
• Northern Ireland

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Future Market Insights, Inc. (ESOMAR certified, recipient of the Stevie Award, and a member of the Greater New York Chamber of Commerce) offers profound insights into the driving factors that are boosting demand in the market. FMI stands as the leading global provider of market intelligence, advisory services, consulting, and events for the Packaging, Food and Beverage, Consumer Technology, Healthcare, Industrial, and Chemicals markets. With a vast team of over 400 analysts worldwide, FMI provides global, regional, and local expertise on diverse domains and industry trends across more than 110 countries.

This release was published on openPR.